The Effects of Increasing versus Decreasing Private Goods on Legislative Bargaining: Experimental Evidence *

Recent interest in reducing budget deficits raises questions regarding the impact of cuts versus increases in private good allocations on legislative bargaining. We investigate this issue using an experimental design where the outcomes are theoretically isomorphic. Payoffs are similar between the two cases, but which type gets their proposals passed changes substantially. Both gains and losses help to “grease ” the legislative bargaining “wheels ” in terms of the time it takes to reach agreement, but gains are more effective than losses. This difference is attributed to a change in agents ’ reference point in going from gains to losses

Coalition Formation in a Legislative Voting Game

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Reference Point Effects in Legislative Bargaining: Experimental Evidence

Recent interest in reducing budget deficits raises questions regarding the impact on legislative bargaining of cuts versus increases in government spending. Using an experimental design where the outcomes are theoretically isomorphic results in significant differences in bargaining outcomes: There are longer delays in reaching agreement with cuts than with increases, along with which legislative types get their proposals passed. These results can be attributed to a change in agents’ reference point in conjunction with differential responses to gains versus losses